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Real Estate Groups of friends are renting vacant mansions in Vancouver

From left: Erik Paulsson, Jeet-Kei Leung and Phoenix Muranetz stop and chat in a common area of the mansion they rent with friends near SW Marine Drive in Vancouver on August 4, 2015.

From left: Erik Paulsson, Jeet-Kei Leung and Phoenix Muranetz stop and chat in a common area of the mansion they rent with friends near SW Marine Drive in Vancouver on August 4, 2015.

Rafal Gerszak for The Globe and Mail

Renting among the rich

As housing prices rise and vacancies remain scarce, group-rented mansions are popping up all over Vancouver

The mansion is in the Spanish Colonial Revival style that was popular in the 1930s. It is old-world splendour, with tiled rooftop, arched windows, a huge front yard and long driveway, like something you'd see in Los Angeles.

But there are signs of the times in Vancouver. The front gate is held shut with a bungee cord, the back garden is for vegetables, and sheets hang off one of the bedroom balconies.

Opulent Hollywood style mansions are the rich people playgrounds of yesteryear. Today's wealthy investor sees the land value only, which means the buildings are often torn down, gutted and renovated, or left to grow derelict, until the owner figures out the opportune time to sell.

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A group of five average income-earners have figured out a way to make the phenomenon work to their advantage. For the last year, they've been renting the 6,000 square foot, five-bedroom mansion and living in spacious, old-world luxury. Their children play in the huge echoey rooms, and they dine under ceilings decorated with elaborate scrolls of ornamental plaster. They each have their own bedroom – about the size of the average modern condo – with fireplaces, walk-in closets and bathrooms. There is a pair of cats and a dog. Everybody helps in the raising of the children. The adults, whose ages are 35 to 44, have house rules.

Jeet-Kei Leung, right, and Phoenix Muranetz in their bedroom. They are expecting their first child.

Jeet-Kei Leung, right, and Phoenix Muranetz in their bedroom. They are expecting their first child.

Rafal Gerszak for The Globe and Mail

The only downside is that it costs a fortune to heat a mansion, and this one still has an old oil furnace. So in winter they use electric heaters and pile on the sweaters.

"In this modern age where people feel separate, having community is a wonderful experience," says resident and filmmaker, Erik Paulsson. "If you have people that can live together, it's like having a family, even if you don't have a family."

Mr. Paulsson pays $850 a month, including utilities. If he were to rent on his own, he'd be paying around $1,500 just for rent. Resident Phoenix Muranetz, who is expecting her first child with partner Jeet-Kei Leung, is also paying less than the norm.

"I am paying almost half of what I was paying to live with my partner and another roommate in a basement suite," says Ms. Muranetz.

They are part of an emerging subculture that has grown in response to Vancouver's lack of affordability, its near-zero vacancy rate, and the need for community. And they have found a way to make use of investment houses that would otherwise be left empty. Ms. Muranetz, an entrepreneur, says there are about 150 other collective houses in Vancouver. They are part of a network of about 1,000 people that lives together, socializes together, and holds fundraising, arts and educational events at each other's homes.

Erik Paulsson checks his laptop in a common area of the mansion.

Erik Paulsson checks his laptop in a common area of the mansion.

Rafal Gerszak for The Globe and Mail

"There are a bunch of these collective houses all over the city," says Mr. Paulsson. "We have friends who have a collective in a penthouse apartment [in the West End]. It's on the top floor, a five-bedroom penthouse suite with views of the whole city."

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All the collective houses are managed by property management companies, says Ms. Muranetz. It's rare for tenants to meet the homeowner, who is usually an offshore investor. Their own landlord lives in Hong Kong, and they think his plan is to demolish the house one day. He is not investing in maintenance of the house to keep it going for decades.

"It's not a long-term investment for them," says Ms. Muranetz.

Collective housing works for absentee landlords because most families can't afford the rents on huge houses, says Mr. Leung.

"There are all these large houses that are not very accessible to most families, and the families that could afford the rents would probably want to be owning and putting the rent into a mortgage," he says. "So we have found that opening."

Denis Krasnogolov and David Blokh, both young businessmen from Ukraine, have responded to this market niche with a brand new company, Mansion Management.

They connect groups of renters with owners of large homes. Because most of the Vancouver homeowners they find are from outside Canada, including China, Russia, Ukraine, and other parts of the Eastern bloc, they often deal with real estate agents who represent them instead. The agents will help sell the house once the owner decides the time is right, and also help the owner purchase other houses for investment. Mr. Krasnogolov, who has the advantage of speaking Ukrainian and Russian, says he was surprised by the struggle he's had in convincing the agents and owners that it's beneficial to rent the homes rather than leave them empty. As a result, of the 200 properties they manage, 10 per cent so far are actual mansions.

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"At first it felt like it was going to be so easy to convince these absentee owners or their real estate agents," says Mr. Krasnogolov. Collective houses pay higher rents than the standard. Also, the house would be looked after. He thought homeowners would jump at the idea.

"The real estate agents have said, 'When I approached my client with your proposition they said, 'Leave the house be. Only when I tell you to sell, when the market is right, depending on whatever is happening in China, Russia or Ukraine, do you sell the house. I'm not interested in renting it out. This is not the reason why I purchased the land.' '

"So, it's an ongoing process for us, to find ways of finding how we can present this in a different light, how can we explain to them, 'Look, the vacant house is not doing any good to anyone.' Our feeling is so far they just want to keep a low profile, and the quieter the community is about this vacant house, the better it is for them.

"It's slowly turning around, but it takes awhile. They don't care about the house. They don't care if it's rented. They just want to hold land until time comes to sell."

Ms. Muranetz says it's not fair to the community to have houses sit empty when so many people need living space.

"You should have to pay more taxes, because it's unfair to buy plots of land and take away housing stock from people that actually live here and work here."

Another challenge is that mansion owners aren't usually big participants in the sharing economy. They tend to value privacy.

Ms. Muranetz used to live in a 10-person collective in a Shaughnessy mansion, where, she says, a lot of the older neighbours raised their eyebrows at them. After a year, the property manager told them they'd have to leave because he wanted a traditional family instead.

Jeet-Kei Leung, left, and Phoenix Muranetz greet the household dog.

Jeet-Kei Leung, left, and Phoenix Muranetz greet the household dog.

Rafal Gerszak/for The Globe and Mail

"The neighbours definitely weren't stoked, because they were mostly in their 70s and for them seeing all these interesting people walking in and out of their house – younger, more alternative people – they didn't necessarily feel comfortable."

The property manager also had concerns about insurance coverage for so many people, which is a common problem for collectives. Also, each municipality has different bylaws for how many unrelated people can share a single-family house. In Vancouver, only five unrelated people can dwell together, no matter how big the house.

They would like the city to change the bylaw so that more people can share houses. They'd also like to see permanent collective housing developments, so that people don't have to rely on absentee landlords. Part of Mansion Management's future plan is to develop collective housing for families.

"Developers don't understand the need for community," says Ms. Muranetz. "They build microlofts, but that doesn't foster family. In a tower, you don't know your neighbours.

"Here, we have support and shared resources – we share cars, we share tools, and do baby sitting."

Erik Paulsson practices shooting his bow and arrow in the courtyard of the mansion he rents with friends near SW Marine Drive in Vancouver on August 4, 2015.

Erik Paulsson practices shooting his bow and arrow in the courtyard.

Rafal Gerszak for The Globe and Mail

They just hope they can keep their household going for as long as possible. They know their arrangement is at the mercy of market forces.

"We're crossing our fingers that somebody might want to have it as part of their portfolio," says Mr. Paulsson. "We hope it doesn't get torn down and turned into condos or something."

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